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No requirement to provide evidence or documents in foreign-seated arbitration

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In the recent decision in Re Samsung C&T Corporation,(1) Justice Gilmour of the Federal Court declined Samsung C&T Corporation's application for leave to issue subpoenas pursuant to Section 23 of the International Arbitration Act 1974 (Cth). Gilmour rejected Samsung's application on the basis that Section 23 of the International Arbitration Act did not give the court jurisdiction to grant leave to issue a subpoena in aid of an arbitration seated outside Australia.

Background

Samsung's application arose out of an arbitration between Samsung and Duro Felguera Australia Pty Ltd seated in Singapore. The arbitration has been reported elsewhere to concern the construction of the Roy Hill Iron Ore Project.(2)

During the arbitration, Samsung wrote to Duro advising of its intention to seek a letter of request under the Hague Convention on Taking Evidence Abroad. Duro confirmed that it did not oppose the request, but took the position that Section 23 of the International Arbitration Act was the appropriate mechanism. The arbitral tribunal later made a procedural order permitting Samsung to make an application to an Australian court in order to issue subpoenas under Section 23 of the International Arbitration Act. In an earlier urgent application brought by Samsung, Gilmour granted leave for Samsung. Duro did not oppose that application.

Samsung later brought a second application (the application considered in the decision under review). As with the first application, this application was not opposed by Duro. On hearing the second application, Gilmour requested that Samsung provide detailed written submissions on the court's jurisdiction to grant leave under the International Arbitration Act.

Issues

Section 23 of the International Arbitration Act sets out the procedure by which a party to arbitral proceedings can apply to a court to issue a subpoena. Section 22A defines the term 'court' for the purposes of Section 23 as follows:

"court means:

(a) in relation to arbitral proceedings that are, or are to be, conducted in a State — the Supreme Court of that State; and

(b) in relation to arbitral proceedings that are, or are to be, conducted in a Territory:

(i) the Supreme Court of the Territory; or

(ii) if there is no Supreme Court established in that Territory — the Supreme Court of the State or Territory that has jurisdiction in relation to that Territory; and

(c) in any case — the Federal Court of Australia."

The critical issue in the proceedings was whether the phrase "in any case" limited the Federal Court's jurisdiction to arbitral proceedings to which Paragraphs (a) and (b) applied (ie, arbitrations conducted in Australia) or whether these words signalled a third category of arbitral proceedings in respect of which the court has jurisdiction to issue subpoenas – namely, arbitrations conducted outside Australia (eg, the arbitration between Samsung and Duro in Singapore).

Decision

Gilmour dismissed Samsung's application for leave to issue further subpoenas. He described his earlier contrary decision (in which he granted Samsung's first application for leave to issue subpoenas) as "clearly wrong".(3)

Gilmour began his substantive reasons with a review of Justice Gummow's decision in Director of Public Prosecutions of the Commonwealth v Kainhofer,(4) which considered the phrase "in any case" in a provision allowing for the issue of arrest warrants for the purposes of extradition. According to Gilmour, Gummow had reasoned that giving the phrase a broad interpretation would be inconsistent with the other provisions of the legislation.(5)

From this basis, Gilmour proceeded to analyse the broader context of the International Arbitration Act, considering:

Section 22A of the International Arbitration Act;

the incorporation of the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration into the International Arbitration Act;

the International Arbitration Act's treatment of foreign arbitral awards; and

the legislative history of Section 22A of the International Arbitration Act.

In relation to the first point, Gilmour stated that the geographical limitations imposed by Sections 22A(a) and (b) suggested that Section 22A(c) (and the words "in any case") had a restrictive meaning.(6)

In regard to the second point, he observed that Article 27 of the UNCITRAL Model Law provides that:

"The arbitral tribunal or a party with the approval of the arbitral tribunal may request from a competent court of this State assistance in taking evidence. The court may execute the request within its competence and according to its rules on taking evidence."(7)

Gilmour further noted that pursuant to Article 1(2) of the UNCITRAL Model Law, the law applies "only if the place of arbitration is in the territory of the (legislating) State" and that "legislating States may, of course, expand their courts' jurisdiction in particular respects to foreign seated arbitrations".(8)

As to the third point, Gilmour observed that express provision has been made in the International Arbitration Act for the enforcement of foreign awards, whereas Section 22A of the International Arbitration Act does not expressly refer to foreign arbitrations.(9) On this point, he also stated as follows:

"Furthermore, in the objects of the International Arbitration Act set out in s 2D, separate provision is made for the recognition and enforcement of arbitral awards generally (in s 2D(c)) and the obligations Australia has in respect of recognising and enforcing foreign awards specifically (in s 2D(d)).

The specification of 'foreign' awards and arbitration agreements in pt II and the objects of the International Arbitration Act points against a presumed intention that s 22A be read expansively to include foreign-seated arbitral proceedings."(10)

Commenting on the legislative history of Section 22A of the International Arbitration Act, Gilmour observed that identical wording to Section 22A(c) of the International Arbitration Act was inserted into Section 18(c) to provide the Federal Court with concurrent jurisdiction to the state and territory supreme courts over certain functions and powers created.(11) He also observed that a later amendment gave the Federal Court an identical jurisdiction over the International Arbitration Act to state and territory supreme courts.(12) In concluding this point, Gilmour cited the explanatory memorandum for the legislation which created Sections 22A and 23, which stated that the amendments were made to facilitate "international commercial arbitrations in Australia".(13) It was from this basis that Gilmour concluded that:

"Allowing for a third type of arbitral proceedings to be included, in the absence of clear words to that effect, would be inconsistent with the purpose of the International Arbitration Act and indeed the purpose of the amendments that introduced both ss 22A and 23. The options and choices afforded under such provisions of pt III of the Act are therefore limited to parties who have commenced their arbitral proceedings in Australia."(14)

Notably, Gilmour summarily dismissed Samsung's alternative argument that "territorial nexus" between Australia and the arbitration in question would overcome the jurisdictional issues. He recalled that "this submission was rather faintly put" and that he did not accept it.(15)

Comment

Gilmour's decision was premised on a narrow construction of Section 22A(c) of the International Arbitration Act, which defines the term 'court' for the purposes of the subpoena power in Section 23 of the International Arbitration Act. The result of Gilmour's narrow construction is that Australian courts can issue subpoenas only in aid of arbitrations that are being conducted in Australia. Section 23 of the International Arbitration Act does not mandate an Australian court to issue subpoenas in connection with foreign-seated arbitrations, like that which is taking place between Duro and Samsung in Singapore.

While some practitioners will agree with Gilmour's strict interpretation of the International Arbitration Act, others – particularly those actively engaged in international arbitration in Asia-Pacific – may find the decision less satisfactory. It may be argued that Gilmour's localised reading of the words "in any case" (in Section 22A(c) of the International Arbitration Act) is difficult to reconcile with the objects of the International Arbitration Act (which include the facilitation of international trade and commerce by encouraging the use of arbitration as a method of resolving disputes)(16) and the pro-arbitration policy that has long prevailed at common law in Australia. These competing views of the provision may be tested in due course.

Gilmour indicated that the Hague Convention on Taking Evidence Abroad could operate as an alternative to Section 23 of the International Arbitration Act.(17) However, there are several issues with this. First, there is some debate as to whether the Hague Convention is available in international arbitration. Having said that, arguably, the Australian legislation that implements the Hague Convention is potentially broader than the Hague Convention itself, such that the implementing legislation arguably applies to arbitration.(18) Second, in Australia, the process for obtaining evidence under the Hague Convention is, in general, more time consuming and rigid than under the process for issuing subpoenas. Finally, the Hague Convention process largely places control in the hands of the court administering the request, whereas, a subpoena-based process will leave more control in the hands of the tribunal.

(18) See, for example, Sections 115 and 166 of the Evidence Act 1906 (WA); Sections 31 and 32 of the Evidence on Commission Act 1995 (NSW). Cf Article 1 of the Hague Convention on Taking Evidence.

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